The Irish Department of Finance on September 16 published a series of papers examining tax policy in advance of Budget 2022, including issues related to corporate tax and international and EU developments.
The international tax paper highlights the potential impacts of the pending OECD/G20 Inclusive Framework global tax reforms. For Ireland, the reforms mean the potential loss of an estimated one-fifth of corporate tax revenues (EUR 2 billion annually) and mark a threat to the country’s 12.5% corporate tax rate that has been a central part of its economic policy. Nonetheless, the paper notes that several important questions remain about how such negotiations will ultimately come out. Irish Finance launched a consultation in July on the impact on the country’s tax policy of the global reforms.
In addition to EU’s implementation of an OECD deal, the international tax policy paper highlights other pending EU tax developments impacting Ireland. These include the proposal to address the misuse of shell companies, the proposal on public country-by-country reporting, and the proposal for a common corporate tax base.
The corporate tax policy update notes as well that Ireland is continuing to work on two measures relating to EU Anti-Tax Avoidance Directives: anti-reverse hybrid rules and an interest limitation rule. The Department of Finance issued a consultation on these proposals in July.
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